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A new UN University report makes the case that water managers have failed at their job, allowing water sources to be depleted and polluted to such a degree that the warming planet requires a declaration of “water bankruptcy” in order to facilitate new economic and political relationships with water.
“It’s a bitter and honest confession, an admission of a failure,” says Kaveh Madani, the report’s lead author. “But it helps whoever files for Chapter 11 and bankruptcy to save the future and protect the future.”
Madani joined Circle of Blue’s Brett Walton to discuss the concept of water bankruptcy, how it can help adjust global priorities, and why economic transformation is key to solving water problems.
Listen to more Circle of Blue podcasts here.
TRANSCRIPT
Brett Walton: Welcome to Speaking of Water. I’m Brett Walton, a reporter for Circle of Blue. Today, my guest is Kaveh Madani. He is the director of the United Nations University Institute for Water, Environment, and Health. Kaveh is the lead author of a new UN University report on water bankruptcy. Kaveh, thanks for joining us.
Kaveh Madani: Thanks for having me.
BW: Water bankruptcy is an evocative and, quite frankly, a somewhat frightening phrase. How is this bankruptcy concept that you talk about in the report different from, say, water stress or a water crisis?
KM: Yeah, it sounds striking, and I think that’s intentional, to get our attention to the fact that we can no longer use some of the labels we are used to when we are referring to some problems that were supposed to be temporary and just an anomaly, and now they’re chronic and keep coming back and are intensifying. As the name might imply, or the phrase might imply, similar to financial bankruptcy, the first thing that we need to think about is the mismatch between water availability and water consumption. Water bankruptcy happens when for a long period, water consumption is more than the renewable fresh water. And as the result the underlying natural capital that produces water, the machinery that produces water, and also the natural capital that depends on water gets destroyed to the extent that it loses its, I would say, elasticity, or power to bounce back, because the thresholds have been passed. That’s where, you know, when we see insolvency combined with irreversibility, that defines the concept of water bankruptcy.
BW: So this is more than just a temporary phase, in which you would put the crisis terminology. This is something that requires a different way of operating.
KM: Exactly. So a stress is just, you know, is reflective of some pressure. Crisis is then a temporary deviation from the baseline. And when you think about the management responses to these things, when it’s stress, we’re alerted, we think that, you know, there are certain things that we can do better. When we are in a crisis, we focus on mitigation with the hope that we go back to the baseline. But bankruptcy tells us that no, we already have passed this stage of a crisis and already in a failure mode. And in a failure mode we have to combine mitigation efforts with adaptation efforts, because the baseline itself no longer exists. We have to admit to a failure of the business model, the governance model, and then plan for a better future within more restricted, essentially, conditions. So with less resources available, and with some ecosystems that have been damaged.
We are not naive about the problems of the international world or the diplomatic world, but at the same time, we think that it is possible to think about water differently, to tell stories that are different, to tell stories that are less dividing.
It’s like, you know, we first start using our checking account – that’s our surface water, mostly, or simply speaking. That gets renewed every year. It gets recharged by nature through precipitation. When it’s short, in years that we need a little extra, we can go to our savings account, our groundwater and use that to address our needs. But what has happened in the world is that we first started exhausting our checking account. It wasn’t sufficient. We went and used our savings account that we inherited from our ancestors, and continued consumption more and more by stealing water from nature, not giving its share to it.
And increased consumption continued, but then what we saw was, we saw a lot of symptoms, different manifestations of water bankruptcy. Started with shrinking surface water, rivers, lakes, wetlands, declining groundwater levels, increased subsidence, sinkholes, salinized soil, soil salinity, desertification, sand and dust storms, wildfires, biodiversity loss, and so on and so forth.
So now we’re in a situation that a lot of things that we thought would be temporary are no longer temporary, and that’s what the report questions, which is based on another peer-reviewed publication that explains the concept. It challenges the existing or the old terminologies that we have been using, and it argues why those terminologies can be misleading to societies, to the stakeholders, and to the policymakers, and why a change in a discourse can be helpful.
BW: And we’ll get to some of the potential solutions and remedies and these governance shifts that you talk about here in a bit. But first, I want to, I guess, address more of the impacts, and the evidence for this bankruptcy. Are there places that you can point to that are having a tougher time of it, or where this bankruptcy is more evident than others?
KM: So the report is essentially showing us that water bankruptcy manifestations appear in different parts of the world in different ways, and almost all continents where humans live are suffering from it. So we don’t have a nation that might not have a risk of bankruptcy. Like financial bankruptcy, what matters is how you manage your budget, not how rich you are. So you can be poor and don’t get bankrupt and you can be very rich and get bankrupt if you don’t adjust your lifestyle according to your budget.
So, in the water world, we see the same thing. Of course, the water-poor nations in the Middle East and North Africa are more vulnerable and have seen symptoms maybe faster than other places, but they were not the only ones. We have seen similar symptoms in the Middle East, like drawing lakes and wetlands or lower storage levels in reservoirs. Not only in the Middle East, but also in California West, right? Because in essence, we kind of produce the problems with the same mechanism or thinking. But water bankruptcy, as the report explains, is not only about quantity or Day Zeros that we are seeing more frequently. We had Cape Town and Chennai and Mexico City, but then now we have Sao Paulo, we have Tehran and some other places, and we expect more of those happening. It’s a very obvious case or symptom or manifestation of water bankruptcy, where the city’s taps run dry. But we also see land subsidence as one of the very obvious symptoms happening in many places – declining groundwater levels in India, in Saudi Arabia, in California, in the Central Valley, in Mexico, and so on. We have a lot of sinkholes appearing in different parts of the world. Recently, Turkey was in the news for that.
Like financial bankruptcy, what matters is how you manage your budget, not how rich you are. So you can be poor and don’t get bankrupt and you can be very rich and get bankrupt if you don’t adjust your lifestyle according to your budget.
Water bankruptcy is also about quality issues. If the quality of the available water degrades, then that water is not usable anymore. So we see in many parts of Asia, for example, or South America, or Africa, that pollution levels are high, and despite the fact that you have water on paper, you cannot use it. On top of these, we have the issues of the glaciers, another savings account that are now being impacted heavily. And on top of all of these, we have climate change. So, of course, where we are irrigating more, we have heavier agricultural activities, the symptoms are more obvious, or emerging, at least, but what the report is telling us is it’s happening everywhere. And then in some basins, it’s very clear that we are already in the bankruptcy mode. In some other places, we might be close to the tipping points, and that’s something that we need to be careful about. But the examples are even, you know, the examples of, or images that we have are also featuring Canada’s wildfires, and we know that Alberta, despite the fact that Canada has a lot of fresh water, but there are places where we have to be worried about the situation, because at the same time, you cannot expand every activity – agriculture, mining, oil and gas, urbanization, data centers, and everything. They cannot go together. At some point, water would turn into a limit for growth.
BW: Right. Yeah, it’s a daunting list of challenges, and all of the problems you identified are tied up in the way that modern economies and societies and politics function. And the remedies for this that you suggest in the report are also similarly large in scale and scope, I’m wondering how easy it is to reform such a system at such scale.
KM: I don’t think the report thinks it’s easy. Indeed, the report says clearly that we don’t have an agenda fitting this reality. And it says that for the last four decades, for example, we have told nations and the member states that they have to manage their water in a more integrated way. That’s kind of the conclusion of most academic papers. And then, you know, some classic and theoretical academic solutions, like remove the subsidies, price water differently. But those are not possible, those are not feasible and practical in the real world. And the report actually calls for attention to a major fact that 70 percent of the world’s water is in the good hands of farmers. Mostly living in the Global South, mostly poor, mostly in developing economies, that don’t have the bandwidth to essentially reduce the pressure of their economy on water.
So the water problem is a political economy problem, and if you want to solve it, we have to pay attention to this very important fact, because in order to solve these problems you have to decouple the economy from water. You have to reduce the pressure of a nation’s economy on water, a basin’s economy on water. And guess what? In many poor economies, water is a way, or agriculture is the way, to create jobs and employment opportunities in those places. You know, water is being used not only to produce food, but also to keep people employed. And governments, rightfully, are very afraid of unemployment issues, because the moment water is taken away from farmers, you need to face not only hunger issues and lack of income issues, but also migration, tension, conflicts, and even emergence of uprisings and other problems.
So, this is not an easy problem. It’s a problem that we have ignored, and if you look at the global agenda, the language that we have used in the UN, we haven’t spoken much about it. It has been the problem of the Global South. The Global North has not been very concerned about these issues, because even if we face the same issue, like, you know, what we have seen in California and Nevada and some other places.
So the water problem is a political economy problem, and if you want to solve it, we have to pay attention to this very important fact, because in order to solve these problems you have to decouple the economy from water.
In California, for example, when we had the big drought of 2014, and after that, although the state got heavily hit by water shortages or a drought, the economy of this state was not impacted heavily. Although there were cities that suffered in the Central Valley, that issue was not having consequences like uprising, migrations, and tensions. Because the state had enough resilience, due to its economy being very diverse. And that’s what we need in many other countries. We need a diverse economy. We need industrialization. We need the expansion of the service sector, so governments can create alternative modes of livelihood in those sectors.
And if that becomes possible, then with less water, less area under cultivation, we can improve even food production through increased efficiency. But that’s not an option at the moment. And at least, even academically, we have not talked much about these solutions to get the attention of the world to the need of a change. So infrastructure is not on its own and technological solutions on their own would not be solving the problems that we are seeing in many parts of the world.
BW: Yeah, it just seems that the changes in ecology and environment are coming so quickly, and the economic changes for a country to move towards more services and build up its industrial capacity is much slower, that the two are on different timescales. One is happening, you know, immediately, and then causing immediate crises.
KM: It is true, but at the same time, we have to pay attention to the fact that we make a lot of development decisions, based on the academic solutions we produce in the Global North, like development aid and funds go into certain projects and solutions that don’t necessarily follow or pursue this mission of economic diversification. Sometimes we try to help nations address their water problems through other measures, or we want them to address their climate change issues without appreciating these complexities or some of the primary needs they have.
So the change of the discourse, paying attention to this fact, also is an opportunity for us in academia, in other places, in the think-tank community, and in media, to appreciate these complexities, the diversity of the problems that we are facing around the world, and then see how we can align national priorities with international priorities. Indeed, this is one of the things that the report clearly speaks about. After saying that we are bankrupt, and encouraging governments to admit to a bitter fact at the moment, immediately to be able to protect the future. This is true also in financial bankruptcy. It’s a bitter and honest confession, an admission of a failure, but it helps whoever files for Chapter 11 and bankruptcy to save the future and protect the future.
So this is an important thing, and the report says that water can be, actually, a new common denominator for the world, a common topic, because it covers the concerns of the Global South and increasingly the Global North. But also, it’s the issue of left and right, Republicans and Democrats, conservatives and liberals. And if we pick up this language, if we develop a new discourse and use a new discourse, we can turn water into a uniting topic that now in this fragmented world, in the world that governments are now concerned about their food security, self-sufficiency, production at home, trades and tariffs and so on. It has the potential to align those, address some of those immediate concerns of the government, because water is a pillar of national security. It’s a pillar of peacebuilding, and for that matter, it might be able to open some new doors to address the fragmentation issues.
Plus, the report encourages the government to consider water as an upstream sector, because currently we consider water as a downstream sector. It’s very marginalized. We talk about the impacts of climate change on water resources, but we rarely talk about the impacts of water management on climate change, and the water damages, actually, on climate change, and how a wetland that is going dry, or a river, or even groundwater withdrawal can impact climate change. If we pick up a new lens, and a different lens, then we can convince governments that a dollar spent in water resources not only helps with national security, food security, and stability and employment, but also can help with the climate fight, and the biodiversity fight, and the desertification fight, all those focus areas of the Rio Convention. So then, there is no competition between environmental topics that I unfortunately think the world feels that exists anymore. It’s the alignment of those, and water can be the medium of alignment of those objectives, for the very good reasons explained in the report.
BW: Right, yeah, water as a bridge builder, as a way of connecting people, as a unifying issue, is a hopeful note, even though we see the number of water conflicts – local scale and subnational scale – increasing. That’s the counterpoint, that there is a lot more struggle over water these days, and that it’s not going to be easy to bring about these big changes. I want to end, just a quick question about some of the fixes, and the report recommends big things like restructuring water rights and water claims to more align demand with supply, rebuilding institutions to focus on adaptation, ensuring a just transition, like you talked about with farmers in the Global South using a bulk of water for farming, because that is their livelihood. Seeing all these recommendations, is there a place you can point to, or an example that you would give of a place that’s doing this effectively, at least in a small way, or maybe a big way.
KM: I think, as I refer to examples in the Global North, unfortunately, what I see is that this has been only possible in nations with strong economies, and they have learned by past mistakes that water issues can make their economies vulnerable, and they have to think about it. Israel is a good example. The world appreciates the technological developments of Israel – their desalination plants and recycling and reuse infrastructure and the high irrigation efficiency. What the world doesn’t often talk about is how successful Israel was in decoupling its economy from water, making sure that water shortages do not become a source of, I would say, major vulnerability, for the nation, even though if you look at any water stress index, or ranking of the world, you always see Israel on top. But the reason that resilience has been built is that the economy is diverse.
So that has a message for us, that technology alone cannot solve the problem. Plus, if you cannot work on improving the state of the economy, it’s somewhat impossible to address those problems. And unfortunately, the reality is that governments would continue to bribe every drop of water and every square meter of land to the stakeholders to create jobs and reduce anger. And unless we think about these problems deeply and the solutions realistically, we cannot solve those problems. Yet, the world in 2026 is going to get together one more time for the UN Water Conference to talk about these matters, and that’s a good opportunity for us to think about a new water agenda, to think about how even academia should mobilize its resources to think differently. And the report says, start with measurements. That’s one of the easiest things. Less, I would say, controversial in many places. When we deal with nations, we deal with basins, when governments ask for help, one thing we see often is that there is no serious water accounting going on in many places, and they don’t really know where the water is, and if you cannot do the mass balance properly, it’s very hard for you to choose which use you want to cut, and which trade-offs you want.
I would say, fortunately, with AI, with remote sensing, with satellites, we have now the power to measure, to monitor, and that’s the first step toward building justice and addressing the bankruptcy issues, because we have to see and understand where and how water is being used, how much, and then be able to prioritize the things that are there. And in doing so, then, if you decide to cut from one of the users or stakeholders, then we have to have proper compensation, I would say, mechanisms in place to be able to ensure that this would not result in major injustice issues.
One other thing is, yes, it’s true that the number of conflicts is increasing, and it’s not only at the lower levels, at the farmers’ levels, at the village levels, within cities, but also between states and provinces, or at the international level. That’s a given. That’s very intuitive. At the same time, history has shown us that water has been also a good excuse for promoting cooperation. Who knows? If we change the discourse, if we think differently, we might have a chance to turn it into an issue that can address the fragmentation issue, and that’s something.
We’re not naive about the zero-sum aspect of some water games. We are not naive about the problems of the international world or the diplomatic world, but at the same time, we think that it is possible to think about water differently, to tell stories that are different, to tell stories that are less dividing, if they are more inclusive and are reflective of the concerns of the Global South, and if we do so, then we can earn their trust and bring them to the negotiations table and do a better job together.
BW: That is the hope, and there is no shortage of opportunities for improvement. Kaveh, thanks for the conversation.
KM: Thanks for having me, Brett.
BW: You’ve been listening to Speaking of Water. I’m Brett Walton, reporter for Circle of Blue. My guest today is Kaveh Madani, who is the lead author of a new UN report on global water bankruptcy.
This interview transcript was edited for clarity and readability.